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Apple Inc. (AAPL): Are Hedge Funds Chasing Momentum Stocks?

Reymerlyn Martin
·5 min read

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Apple Inc. (NASDAQ:AAPL).

Is Apple Inc. (NASDAQ:AAPL) a buy right now? Money managers were turning bullish. The number of bullish hedge fund bets increased by 6 lately. Apple Inc. (NASDAQ:AAPL) was in 134 hedge funds' portfolios at the end of September. The all time high for this statistics is 152. Our calculations also showed that AAPL now ranks 9th among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are a lot of indicators market participants have at their disposal to value stocks. A couple of the less known indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce the S&P 500 by a significant amount (see the details here).

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla's stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's go over the fresh hedge fund action surrounding Apple Inc. (NASDAQ:AAPL).

Hedge fund activity in Apple Inc. (NASDAQ:AAPL)

At third quarter's end, a total of 134 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in AAPL over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Berkshire Hathaway held the most valuable stake in Apple Inc. (NASDAQ:AAPL), which was worth $109 billion at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $6918.7 million worth of shares. Fisher Asset Management, AQR Capital Management, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 47.78% of its 13F portfolio. White Square Capital is also relatively very bullish on the stock, setting aside 24.82 percent of its 13F equity portfolio to AAPL.

As industrywide interest jumped, some big names have jumped into Apple Inc. (NASDAQ:AAPL) headfirst. Renaissance Technologies, founded by Jim Simons, established the largest position in Apple Inc. (NASDAQ:AAPL). Renaissance Technologies had $41.2 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $34.5 million position during the quarter. The other funds with new positions in the stock are Bart Baum's Ionic Capital Management, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and Daryl Smith's Kayak Investment Partners.

Let's now take a look at hedge fund activity in other stocks similar to Apple Inc. (NASDAQ:AAPL). These stocks are Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOG), Alphabet Inc (NASDAQ:GOOGL), Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc (NASDAQ:FB), and Visa Inc (NYSE:V). This group of stocks' market values resemble AAPL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSFT,234,42105027,12 AMZN,245,43745759,-3 GOOG,150,15274196,6 GOOGL,162,14713801,5 BABA,166,28833956,12 FB,230,29337247,20 V,160,18651052,6 Average,192.4,27523005,8.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 192.4 hedge funds with bullish positions and the average amount invested in these stocks was $27523 million. That figure was $127302 million in AAPL's case. Amazon.com, Inc. (NASDAQ:AMZN) is the most popular stock in this table. On the other hand Alphabet Inc (NASDAQ:GOOG) is the least popular one with only 150 bullish hedge fund positions. Compared to these stocks Apple Inc. (NASDAQ:AAPL) is even less popular than GOOG. Our overall hedge fund sentiment score for AAPL is 42.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately AAPL wasn't nearly as successful as these 20 stocks in recent weeks; AAPL investors were disappointed as the stock returned -1.5% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.

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